Monrovia — Racing against time, the George Weah-led government is hoping to complete its much-coveted coastal highway road project within a three-year time frame. The president has not hidden his desire. In fact, he was clear, during a tour of Bong County in June while responding to his critics, that roads development was crucial if he must have any chances of winning a second term.
Said President Weah: "My people, don't listen to those criticizing for lobbying for loans. Those doing so are enemies of the country. The loans I am taking will be able to complete the roads in three years. When I am asking partners for loans, any of them who tell me that they want complete the roads in six years, I can say no because I know in the next six years, if I don't do anything for you, I will not be re-elected"
Traditional Lenders Back in Play
Last week, the government's chief spokesman, Information Minister Lenn Eugene Nagbe reiterated the objectives when he addressed the news media to reveal that President Weah had pitched to key developmental partners including the World Bank, a maximum of three-year timeframe for the targeted roads to be built, which means his government expects the bank to expedite the deal for the availability of the fund.
"The World Bank now has presented to the government of Liberia an offer of US$500 million initially for the support of road. We have not concluded the agreement yet; the Minister of Finance is leading the discussion. We have been given an offer and the government will pay over the concessional period at the interest rate of 0.5 percent," the minister said.
On Monday, the World Bank, responding to a FrontPageAfrica inquiry acknowledged that it has offered to support the government of Liberia in its effort to explore potential sources of funding for the development of roads in Liberia.
While making no mention of a timeframe, the bank said: "The Government expects to raise close to US$500 million with potential contributions from development partners, including from the World Bank Group; and by mobilizing private financing through guarantees and other instruments. The government is already working with the World Bank on developing a similar financing model for the proposed South-East Corridor Road Asset Management Project (SECRAMP) to support the construction of the Ganta - Tappeta - Zwedru road."
The bank added that over the past decade and a half, it has mobilized more than US$450 million under the Multi-Donor Trust Funds and the International Development Association (IDA), an affiliate of the World Bank Group, to finance the rehabilitation of about 500 kilometers of paved roads, including the Cotton Tree-Bokay Town-Buchanan road, the Monrovia city streets, the Monrovia-RIA road and the Monrovia-Gbarnga-Ganta-Guinea Border road.
Until now, the Weah administration had been reluctant to explore the traditional channels of securing loans through the World Bank or the IMF choosing instead to put all of its chips in two controversial commercial loans - Eton Financial Private Limited and the Burkina Faso-based firm, Ebamof.
The 'Devil': Uncertainty Over Eton, Ebamof
The World Bank's intervention follows weeks of controversy surrounding the government's quest to secure the Eton and Ebamof commercial loans that have been shrouded under a cloud of scrutiny amidst concerns stemming from the lack of transparency and accountability, conflict of interest and a clear breach of the country's code of conduct.
The US$536 million arrangement with Eton Financial Private Limited is geared toward the construction of a coastal corridor connection of counties' capitals road project, via the construction of the Buchanan-Cestos City to Greenville to Barclaryville Road, the Barclayville to Sasstown Road and the Barclayville to Pleebo Road. Other roads to benefit from the loan include; the Medina to Robertsport Road and the Tubmanburg to Bopolu Road. Also to be constructed are 'rest stops' and 'roadside service areas.'
The US$420 million loan aims at financing the design, construction, and supervision of road corridors in Monrovia(Somalia Drive-Kesselly Boulevard to Sinkor) and northeastern Liberia - Tappita-Zwedru Road, including Toe Town to La Cote D'Ivoire and Zwedru-Greenville." The transaction, according to the document obtained by FPA has been labeled "The Loan" is between the Liberian government and Mr. Mahmadou Boukoungou's road construction company, EBOMAF.
Some advisors and supporters went as far as slamming the traditional institutions as not doing enough for Liberia and encouraging the President to take loans from anywhere it is available - even from the devil.
Mr. Lester Tenny, Vice President of Technical Services at the National Oil Company of Liberia specifically said there was nothing wrong even if Liberia were borrowing money from the devil. According to him once the money from the devil was intended for development, it is good. "When the President said he was pursuing a pro-poor agenda, this was what he meant: developing our infrastructure, creating avenues from private sector investment, employment creation and poverty reduction. The economy will expand and the government will generate more income in the future to repay her loans," said Tenny.
Justice Minister Frank Musah Dean described it as one of the best loan agreements the country has ever entered into. He called on critics to give the process a chance and stop interposing hurdles to the process.
Referring to the Eton deal, the minister charged: "Some people say the people don't have website; will the money be sent through the web?" The minister further stated that as the legal person of the government, he has read the loan financing agreement, and "Its benefits surpass petty consolidation." "If you enact this agreement, it becomes law that will impact our economy. The agreement does not impose any particular company. The Ministry of Public Works will do the vetting," he added.
Public Works Minister Mabutu Nyenpan, appearing before the Senate called for radical affirmative action if the situation of roads that has become a 'national security threat and national emergency is to be addressed.' He argued that the country's annual budgetary allotment to roads connectivity is too meager to address the chronic nature of bad roads in the country. The Works Minister also believes that intervention by bilateral partners in the road sector is inadequate to substantively change the situation.
Both Eton and Ebamof loans have drawn concerns and criticisms toward the Weah-led government with many questioning the government's decision to seek loans outside the traditional World Bank and International Monetary Fund(IMF) framework.
Earlier this year, the Executive Board of the International Monetary Fund (IMF) emphasized that future Liberia debt obligations should be undertaken transparently, limiting new debt to concessional terms, with effective implementation of infrastructure projects. The IMF is concerned that acquisition of new debts is not being done transparently. The Fund demands transparency. "Directors emphasized that future debt obligations should be undertaken transparently, limiting new debt to concessional terms, with effective implementation of infrastructure projects", directors noted in their report.
The World Bank Lending Process
Pressure from donors and key stakeholders and critics labeled as "enemies" have sent the administration back to the drawing board with many in the administration appearing to be reshaping their focus on the traditional lenders amid mounting concerns that both Eton and Ebomaf are struggling to find banking institutions willing to accept their terms or approve the loans.
Although Liberian authorities are now trumpeting the World Bank's intervention, the process is far from over.
The largest public development institution in the world doles out around US$ 25 billion a year to developing countries outlined in Article One of its Articles of Agreement, "to assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes" and "to promote the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment ... thereby assisting in raising the productivity, the standard of living and conditions of labour in their territories".
According to the World Bank, the goal aim to provide long-term loans to governments for the financing of development projects and economic reform.
Interest rates on World Bank loans are revised every six months and typically, the Bank charges borrowers a rate of interest 0.5 per cent above its own cost of borrowing on the international market, the proceeds going towards paying the Bank's operating costs and to add to reserves.
In 1980, the Bank introduced adjustment lending under its structural adjustment programme (SAP) to provide financing to countries experiencing balance of payments problems while stabilisation measures took effect. These loans, according to the bank, are provided to countries for social, structural and sectoral reforms, for example for the development of national financial and judicial institutions. The World Bank attaches conditions to its loans with the stated aims of ensuring the country's economy is structured towards loan repayment.
The project cycle is the framework used to design, prepare, implement, and supervise projects. The duration of the project cycle is long by commercial standards. It is not uncommon for a project to last more than four years; from the time it is identified until the time it is completed. A World Bank project consists of six stages: Identification, Preparation, Appraisal, Negotiation/Approval, Implementation/Support, Completion/Evaluation.
As part of the process, the bank works with a borrowing country's government and other stakeholders to determine how financial and other assistance can be designed to have the largest impact. After analytical work is conducted, the borrower and the Bank Group produce a strategy, called Country Partnership Framework, to identify the country's highest priorities for reducing poverty and improving living standards.
Identified projects can range across the economic and social spectrum from infrastructure, to education, to health, to government financial management. The World Bank and the government agree on an initial project concept and its beneficiaries, and the Bank's project team outlines the basic elements in a Project Concept Note.
Loan Disbursement Could Take Between 1-10 years
As part of the project preparation, The borrower government and its implementing agency or agencies are responsible for the project preparation phase, which can take several years to conduct feasibility studies and prepare engineering and technical designs, to name only a few of the work products required. "The government contracts with consultants and other public sector companies for goods, works and services, if necessary, not only during this phase but also later in the project's implementation phase. Beneficiaries and stakeholders are also consulted now to obtain their feedback and ensure the project meets their needs. Due to the amount of time, effort and resources involved, the full commitment of the government to the project is vital."
According to the bank, it generally takes an advisory role and offers analysis and advice when requested, during this phase. "However, the Bank does assess the relevant capacity of the implementing agencies at this point, in order to reach agreement with the borrower about arrangements for overall project management, such as the systems required for financial management, procurement, reporting, and monitoring and evaluation."
In a bid to safeguard policies, projects supported through the Investment Project Financing instrument are governed by operational policies and procedures which are designed to ensure that the projects are economically, financially, socially and environmentally sound.
The project appraisal under the cycle, gives stakeholders an opportunity to review the project design in detail and resolve any outstanding questions. "The government and the World Bank review the work done during the identification and preparation phases and confirm the expected project outcomes, intended beneficiaries and evaluation tools for monitoring progress. Agreement is reached on the viability of all aspects of the project at this time. The Bank team confirms that all aspects of the project are consistent with all World Bank operations requirements and that the government has institutional arrangements in place to implement the project efficiently. All parties agree on a project timetable and on public disclosure of key documents and identify any unfinished business required for final Bank approval. The final steps are assessment of the project's readiness for implementation and agreement on conditions for effectiveness (agreed upon actions prior to implementation). The Project Information Document is updated and released when the project is approved for funding."
Once the Project is appraised and all project details negotiated and accepted by the government and the World Bank, the project team prepares the Project Appraisal Document, along with other financial and legal documents, for submission to the Bank's Board of Executive Directors for consideration and approval. When funding approval is obtained, conditions for effectiveness are met, and the legal documents are accepted and signed, the implementation phase begins.
Following that process, the borrower government implements the development project with funds from the World Bank. "With technical assistance and support from the Bank's team, the implementing government agency prepares the specifications for the project and carries out all procurement of goods, works and services needed, as well as any environmental and social impact mitigation set out in agreed upon plans. Financial management and procurement specialists on the Bank's project team ensure that adequate fiduciary controls on the use of project funds are in place. All components at this phase are ready, but project delays and unexpected events can sometimes prompt the restructuring of project objectives."
Once underway, the implementing government agency reports regularly on project activities. The government and the Bank also join forces twice a year to prepare a review of project progress, the Implementation Status and Results Report. "The project's progress, outcomes and impact on beneficiaries are monitored by the government and the Bank throughout the implementation phase to obtain data to evaluate and measure the ultimate effectiveness of the operation and the project in terms of results."
Once the project is completed and closed at the end of the loan disbursement period, a process that can take anywhere from 1-10 years, the World Bank and the borrower government document the results achieved; the problems encountered; the lessons learned; and the knowledge gained from carrying out the project. "A World Bank operations team compiles this information and data in an Implementation Completion and Results Report, using input from the implementing government agency, co-financiers, and other partners/stakeholders. The report describes and evaluates final project outcomes. The final outcomes are then compared to expected results. The information gained during this exercise is also often used to determine what additional government measures and capacity improvements are needed to sustain the benefits derived from the project. In addition, the evaluation team assesses how well the entire operation complied with the Bank's operations policies and accounts for the use of Bank resources. The knowledge gained from this results measurement process is intended to benefit similar projects in the future."
Following that process, the Bank's Independent Evaluation Group assesses the performance of roughly one project out of four (about 70 projects a year), measuring outcomes against the original objectives, sustainability of results and institutional development impact."
Eight months into its first term, the Weah administration has its work cut out in laying out a game plane to begin putting in the mechanism to jumpstart the rigourous process of trying to secure nearly a billion dollars in loans for its road project.
After weeks of political wrangling, the administration has put its guard down in acknowledging stakeholders were raising red flags over its quest for Eton and Ebamof loan deals. Minister Nagbe told journalists last week that President Weah had told development partners "if they do not want him to borrow in the commercial space, they should bring money for his development agenda."
The bank has taken the first step in agreeing to help the government source money although not quite fully committing itself to providing the full amount. Nagbe had said earlier that the World Bank and the consortium of other partners will give Liberia a concessional financing arrangement that we as a government are looking at positively of a total of US$1billion dollar".
The quest for US$1 billion in loans for roads comes with complications and patience. For now, some of the administration's early missteps including the illegal removal Mr. Konah Karmo as head of the Liberia Extractive Industries Transparency Initiative(LEITI) which drew criticism from various civil society organizations (CSOs) on grounds that it violated the law that established the anti-graft institution in 2009.
Karmo was replaced with former Montserrado County Lawmaker, Gabriel Nyenkan. The LEITI Act of 2009 requires the President to appoint members of the Multi Stakeholders Group (MSG), and "shall designate one of them as the Chairperson and another as the Co-Chairperson".
"The power to recruit the Head of Secretariat, Deputy and other staff members of the LEITI Secretariat therefore lies with the MSG, which should comprise of members of the legislature, CSOs and the Executive," according to Section 6.3d of the LEITI Act.
The Center for Transparency and accountability in Liberia (CENTAL), one of the CSOs against the move, slammed the President's decision at the time, declaring that the sanctity and credibility of integrity institutions must remain intact. "The government, especially President Weah, must do nothing to undermine that, whether directly or indirectly," CENTAL said.
The administration has also taken heat over its unilateral decision to disregard the advice or consult of the Public Procurement Concessions Commission(PPCC).
Mr. Dorbor Jallah, Chief Executive Officer of the PPCC said recently that the procurement oversight agency was never consulted during the public hearing over Eton and Ebomaf.
Said Mr. Jallah: "The section on single sourcing is Section 55 of the PPCC law; when you read that section, you'll see that there are specific conditions under which single source is granted - none of those conditions were met for the granting of that loan. It didn't meet the requirements of the law. Apparently, those are some of the reasons that why the Legislature decided not to invite the PPCC, because we would have flagged that."
Correcting Early Missteps Crucial
With emphasis now being placed on the traditional World Bank loan, the administration may have to rethink its earlier stance regarding the transparency and accountability of its dealings in a quest for loan to complement whatever it intends to get from the World Bank.
A delegation headed by Finance Minister Samuel Tweah, Justice Minister Musah Dean, Minister of State for Presidential Affairs Nathaniel McGill and President Pro Temp of the Senate Albert Chie are in Instanbul looking to secure advances on future taxes from the Turkish mining firm, MNG, in hopes of salvaging the economy and possibly complementing the World Bank effort.
But sources tell FrontPageAfrica that the delegation was informed by the company that it needs to consult its US partners before agreeing to pay advance on taxes. The administration, according to sources is said to be seeking ten-year advance from MNG.
Complicating the quest to get money from MNG is the fluidity of the mining industry and the company's concerns regarding shift in global prices which could fluctuate over time - to the company's disadvantage.
The sticking point in all this for the Weah administration in seeking potential contributions from development partners, including the World Bank Group, is how the government intends on mobilizing private financing through guarantees and other instruments as the World Bank is now suggesting?
Key assets like Wologisi and more than a dozen oil blocks are on the table but with global prices in decline, Liberia risk falling prey to losing out on the best possible return for its assets.
For Weah, road development is essential to jumpstarting the country's resurgence which is why he has been hard on critics standing in his way and critical of his government's quest to seek non-traditional sources of funding for his ambitious road projects. "I told them that if you elect me, I will build your roads. I am trying to build the roads, they are criticizing me. From 1847 to 2018, we Liberians still don't know what we want; if you don't want road and good health system, let me know".
For many Liberians and international stakeholders, the issue has not been about not wanting roads, but channelling those goals and objectives through proper processes meeting international best practice and exercising transparency and accountability in the process. How the Weah government intends to proceed from here could prove pivotal in the coming days as hopes dim on the controversial Eton and Ebomaf loans amid a rejuvenated effort to save face and turn attention to the traditional lenders on whose backs Liberia has relied on in looking to complete its transition from war to peace.